Investment trust company freezes some projects

Riocan Real Estate Investment Trust is freezing new and early stage projects to cut costs during the coronavirus pandemic as rent collection slid. The move will save one of Canada’s largest retail landlords $100 million to $150 million in development spending in 2020, Riocan said in its first quarter report Tuesday.

The Toronto-based REIT said in a separate investor presentation that it collected 55 per cent of its rent in the first quarter. The company expects 28 per cent to still be received and has agreed to deferrals for 17 per cent of its tenants. It has $30 million in security deposits and $5 million of letters of credit available to help offset rents in the event of unresolved defaults.

Chief executive Ed Sonshine said on the investor call that Riocan believes that most of the 15 per cent of its tenant base that are smaller independent retailers will survive, helped by Riocan and the government’s rental assistance program. Riocan reported that funds from operations dipped slightly in the quarter and net income fell 47 per cent. And it withdrew guidance for same-property net operating income growth for 2020 because of the COVID-19 crisis.

“Although the ultimate impact of the health crisis is difficult to predict, Riocan is well positioned to withstand challenges and adversity with a solid foundation based on its major markets focused portfolio and defensive property and tenant make-up,” Riocan said in the report.

Sonshine threw cold water on the theory that the pandemic will permanently change everything about how people interact.